For Financial Professionals in the US

Engaging plan participants starts with understanding how they’re feeling

Retirement Director Ben Rizzuto discusses how findings from several recent studies on plan participant emotions and behaviors can help inform how plan sponsors approach engagement and education.

Ben Rizzuto, CFP®, CRPS®

Ben Rizzuto, CFP®, CRPS®

Retirement Director

Mar 2, 2023
6 minute read

Key takeaways:

  • Recent research on the mindset and behaviors of plan participants presents a mixed picture, with some studies indicating participants are staying the course while others reveal increased levels of financial anxiety.
  • Plan sponsors will need to determine how different segments of participants are feeling and how they may be behaving (or misbehaving) inside the plan.
  • Using that information, sponsors can develop participant personas and engage with these groups based on their specific characteristics.

In my previous article on the topic of America Saves Week, I encouraged plan sponsors to use the framework of the annual event as an easy way to engage with retirement plan participants. Within that article, I also provided some ideas on how plan sponsors can focus their educational efforts on different types of participants.

In this article, I’d like to dig a little deeper into that idea based on recent research on how today’s participants are feeling. I have always believed that if we know how participants feel, we will be in a better position to help them.

Since the beginning of 2022, retirement plan participants have had to deal with a lot. Stock and fixed income markets are down around the world. Inflation is higher than it’s been since before many participants were born. Mortgage rates, credit card APRs, and other interest rates continue to increase. And there are consistent rumblings of a recession.

All of this has affected participants in varying and – as we’ll see below – possibly contradictory ways. Recent surveys of participant emotions and behaviors show that, while many participants are staying the course, others may be increasingly affected by financial stress.

For plan sponsors, it’s important to understand which of these behaviors and emotions apply to their participants so they can work to encourage or reinforce the right behaviors and habits.

First, the bad news

We covered two studies in our latest Top DC Trends and Developments guide that show how recent market and economic events may be negatively affecting participants.

Morgan Stanley’s “State of Workplace Financial Benefits Study”1 found that employees are struggling to find a balance between long-term savings and immediate needs because of the economic impacts related to inflation and/or concerns about a recession. These concerns have led to the following behaviors:

  • 62% of employees report they’ve needed to cut back on their overall savings, with nearly a third reducing contributions to their 401(k) plans.
  • 26% said they are scaling back paying off their debts and loans, with Gen Z (74%) and millennials (68%) more likely to have made these reductions.
  • Money-related stress has also become a performance inhibitor: 71% of employees reported it has negatively affected their work and personal lives.

We can see how this money, work, and personal stress has further affected participants in the “2022 Inside Employees’ Minds” study from Mercer.2 The research revealed that a growing percentage (36%, up from 28% in 2021) of employees are considering leaving their employers due to dissatisfaction about compensation, work-life balance, benefits, and career goals.

One of the main challenges plan sponsors face is how to make sure employees don’t leave. And while it’s disheartening to learn that so many employees are feeling dissatisfied, Mercer’s study offers valuable insight into what might encourage them to stay. Specifically, respondents noted that they’d like more help turning retirement savings into a steady income, an increase in the contribution amount matched by their employer, and matching payments made to student loan debt and/or health savings accounts (HSAs).

Now, for the good news

Two other studies indicate that participants may not be feeling so bad after all, despite the many challenges they’re facing.

First, Empower Institute found in its second annual research study, titled “Empowering America’s Financial Journey – How People Save, Invest and Get Advice,” that even with rising prices and inflation, 63% of survey respondents feel confident they are financially on track for retirement. Furthermore, Empower found that respondents’ savings rates declined by only 0.2% over the last 12 months.3

Similarly, in a preview of Vanguard’s forthcoming “How America Saves” study for 2023, the firm found that, even in the face of negative market performance, participant behaviors remained mostly positive: Nearly four in 10 participants increased their deferral rate and, against a challenging market environment with increased volatility, only 6% of non-advised participants traded during 2022 – the lowest point in 20 years.4

Action items for plan sponsors

Given the mixed picture these recent studies present, the main thing plan sponsors need to do is figure out which camp their participants are in. I think this is an area where plan sponsors would benefit from working with their recordkeepers to gather all the necessary information to determine how participants are feeling and how they may be behaving (or misbehaving) inside the plan. Plan advisors can also help decipher this data to find commonalities among participants, which can then help plan sponsors create personas to engage them in targeted ways.

Possible examples include:

  • Participants who have decreased their deferral rate
  • Participants who have opted out
  • Participants who have changed their asset allocation by 5% or more
  • Participants nearing retirement age who may be falling prey to sequence of return risk

Based on these personas, plan sponsors can create educational content such as emails or handouts or hold in-person and/or recorded educational sessions to engage with these groups based on their specific characteristics.

If nothing else, this outreach should let participants know that help is available. One of the main findings – and a huge opportunity – from the Morgan Stanley study was that 47% of employees said they had never thought to reach out for help or were unsure if they were allowed to ask their employer for assistance with their personal finances.5

Again, simply making sure participants know they are being supported can go a long way toward addressing the negative feelings discussed above. By providing – and communicating – their support, employers show that they have participants’ best interests at heart and are devoted to their long-term success. That support can lead to decreased stress for participants, which can lead to greater confidence. And when participants feel more confident, they are in a better position to adopt the positive financial behaviors that can help them reach their goals.

1 “State of the Workplace II Financial Benefits Study.” Morgan Stanley, September 2022.
2 “US 2022 Inside Employees Minds Report.” Mercer, September 2022.
3 “Empowering America’s Financial Journey – 2022.” Empower Institute, November 2022.
4 “Positive signs in a challenging economy: A preview of How America Saves 2023.” Vanguard, February 3, 2023.
5 “State of the Workplace II Financial Benefits Study.” Morgan Stanley, September 2022.


This information is not intended to be legal or fiduciary advice or a full representation of all responsibilities of plan sponsors and financial professionals.

The information contained herein is for educational purposes only and should not be construed as financial, legal or tax advice. Circumstances may change over time so it may be appropriate to evaluate strategy with the assistance of a financial professional. Federal and state laws and regulations are complex and subject to change. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of the information provided. Janus Henderson does not have information related to and does not review or verify particular financial or tax situations, and is not liable for use of, or any position taken in reliance on, such information.